The IFRS Foundation's International Sustainability Standards Board (ISSB) is set to release the finalized versions of the first global standards for sustainability and climate-related reporting in June of this year, according to IFRS Chair Erkki Liikanen. Speaking on a panel at the WEF Forum in Davos, Liikanen revealed the goal of the ISSB and commented on the speed at which the standards have been developed.
"The aim is very concretely that they would be able to publish, adopt and issue the finalized standard by mid-this year, which means in June," Liikanen said. "And it's tremendous speed. I've been working with standardization, and normally two issues never meet speed and standardization. But this time because there is such an urgency - we have the Paris Agreement, we have a lot of pressure from the markets, from NGOs - everybody feels that we must move forward."
The ISSB was officially launched in November 2021 at the COP26 climate conference, with the goal of developing IFRS Sustainability Disclosure Standards to provide a global baseline of disclosure requirements that can be used by jurisdictions on a standalone basis or incorporated into broader reporting frameworks. The board released the first exposure drafts for its first two reporting standards, covering general requirements for sustainability-related financial information and climate-related disclosures, in March 2022.
Liikanen noted that the release of the standard is only the first step in establishing a globally consistent and transparent reporting system, with a need to ensure widespread endorsement and adoption by regulators. He stated that the IFRS has been working closely with IOSCO, the leading standards setter for securities regulators, and expects the organization's endorsement "relatively soon."
Following adoption, the next step would be to establish assurance for auditors to ensure that companies are following the standards. In terms of next steps for the ISSB, Liikanen said that following the release of the initial standards this year, the board will consult on a series of issues, including reporting on biodiversity, human capital, and human rights, as well as the connectivity of financial reporting with sustainability reporting.
Liikanen urged business leaders to prepare now to begin reporting on sustainability issues in the near future. "Jean-Paul Servais, who is the chair of IOSCO… said that the aim should be that in 2024, financial reporting and sustainability reporting will go together. And that's a good point to keep in mind. If you are a business leader, be ready to report on both in 2024," he said.
The ISSB's release of the global standards for sustainability and climate-related reporting is a significant step towards achieving a more sustainable and transparent global economy. The standards will provide a common framework for companies to report on their environmental and social impact, allowing for better comparability and accountability. With increasing pressure from governments, investors, and the public for more sustainable business practices, the release of these standards could not come at a more important time.